Every business owner knows what a record year feels like.
Sales are up. The phone won't stop ringing. You're busier than you've ever been.
Then you look at what you actually took home, and it's about the same as two years ago. Except now you have more employees, more payroll, more headaches, and less time.
Somewhere along the way, bigger became the goal.
Not more profit. Not more time off. Just bigger.
That was the conversation in a recent episode of the Planting Seeds Podcast, where Nick and I took on a question a lot of owners never stop to ask: how do you know whether you should actually grow your business?
Nick opened with a Jurassic Park reference that fits better than you'd expect. Sometimes we're so focused on whether we could that we never stop to ask whether we should.
Meet Betty and Her Very Busy HVAC Company
Nick brought back Betty, our completely fictional business owner. This time she runs an HVAC company.
She has two technicians and two trucks, and she still takes a lot of the service calls herself. Every summer, she has to turn work away.
So she starts thinking about adding a second crew. On paper, she believes that crew could bring in another $400,000 a year.
But then she has to pay new technicians. Buy another truck. Buy parts. Hire someone to handle the extra calls and scheduling.
What's left for Betty is about $35,000.
And the estimates, the callbacks, the tech who doesn't show up on a Saturday in July? That's still Betty.
$400,000 more in sales. $35,000 more for Betty. And probably a lot more Saturdays.
That trade might be worth it to her. It might not. But as Nick put it, the real question isn't "Can I grow?" It's "What does growing actually get me?"
Growth That Only Looks Like Growth
I'll admit I've lived this one.
When I ran a marketing company, our first two years were great. We were adding clients left and right. We got an office downtown, which felt really fancy. We added another person.
Everything looked like growth.
But looking back, I don't think we ever turned more of a profit. Every time the business got bigger, the things we added to get bigger ate up the difference.
Nick's response was simple. Growth for the sake of growth isn't really growth. It's just getting bigger.
Do You Want to Do More or Do Better?
I asked Nick if he had a rule for telling smart growth from growth for its own sake.
His answer wasn't a ratio or a formula. It was a question he asks himself:
Do I want to do more, or do I want to do better?
For him, the answer is always better. He wants to be as good as he can be at what he does, and he wants to make more money for the hours he puts in.
Nick pointed out that the question works for employees, too. More responsibility, more hours, more meetings, and more boxes to check only help you if they come with more compensation. Otherwise, you're just burying yourself under a pile of tasks.
He told a story from his first job, at Burger King in high school. After about a year, he could run just about everything in the restaurant. He got a 25-cent raise, from $4.25 to $4.50 an hour. Then Florida raised the minimum wage to $4.75, and his raise disappeared.
Before long, he was training brand-new hires to put burgers on the broiler, and they were making the same hourly rate he was.
He was doing more. He wasn't being paid for it. And he decided he wasn't going to do that for the rest of his life.
The Numbers to Check Before You Expand
Next, I asked what numbers an owner should look at before making the call to expand. Nick said that if this were a client, here's what they'd look at before spending a dime.
What you'd keep, not what you'd sell. Revenue is the number that gets people excited. Profit is the number that pays you. For Betty, $400,000 was the revenue. The $35,000 is what actually reaches her. Know your number, and decide whether it's big enough to matter.
The cash it takes to get there. New employees get paid starting day one. New equipment has to be paid for starting day one. But the new work might take months to fill in. How long can you cover those costs before the growth starts paying for itself?
Your hours. A bigger business needs someone to run it. If that someone is you, how many more hours a week will it cost you?
If you don't like the answer to any of those questions, Nick's take is that you're not ready yet.
And before any of that: when did you last raise your prices? If you're already turning work away, you may not need to grow yet. You may need better pricing. As we talked about in our earlier episode on whether you're charging enough, losing a few customers after a price increase isn't as scary as it sounds when you're already turning people away.
For Betty, that's probably where I'd start too. I understand the temptation to patch the summer rush with part-time or seasonal help. It sounds great on paper. But temporary help isn't always dependable, summer is when people take vacations, and when someone doesn't show up, the owner fills the gap.
I've been there. When I was a director of operations for a store and someone didn't come in to open for breakfast, guess who was on the grill or running the register at 5 a.m.? Somebody has to keep the doors open, and in a small business, that somebody is usually you.
A Business You Love or One You Barely Recognize?
In our rapid-fire segment, I asked Nick whether he'd rather own a small business he loves or a much bigger business he barely recognizes.
He picked the one he loves.
But he was clear that size isn't the problem. Not recognizing it is. That means somewhere along the way, you stopped choosing and started reacting.
Growing because you made specific choices is very different from growing because the phone wouldn't stop ringing.
And according to Nick, if the phone won't stop ringing, your pricing is probably too low. When low prices keep the calls coming, you eventually can't keep up. You hire people, and at least in the short term, quality tends to dip because someone else is doing the work instead of you. Without a strategy behind it, growth can pull you away from the reason you started the business in the first place.
Two Signs You're Growing Too Fast
I asked for one sign a business is growing too fast. We ended up with two.
Nick's was mistakes coming back. Jobs you used to get right now need a second trip. A customer who never complains starts complaining.
He's told his kids since they were little that a job isn't done until it's done right. Every callback means you did the job twice and got paid once. Three trips, still paid once. By the fourth, that customer probably isn't keeping you around.
Mine was staff turnover. If you're constantly hunting for help because you can't keep good people, something's off. Either you're growing so fast you're hiring without really vetting people, or you made promises during the hiring pitch the business can't keep. Picture Betty telling a new tech about bonuses tied to job volume, then the work drying up once summer ends.
Shoddy work and turnover look like different problems. They usually come from the same place.
"Everyone Says I Should Open a Second Location"
We also took a question from the field, from a conversation with one of our clients a couple of months ago:
Everyone keeps telling me I should open a second location. I'm not sure I actually want one.
Nick's answer: if you're not sure, listen to that.
"Everyone" isn't the one who will be driving between two buildings every day. People love to tell you how to grow. They don't have to sign the lease.
That doesn't mean skip the numbers. Run them. But Nick said your gut has often done the math before your brain catches up.
Context matters, too. In a small town of 12,000 people or less, it's fair to ask why you'd need two locations when it isn't hard to get across town. In Atlanta, Jacksonville, or Orlando, a second location might make more sense.
My wife has a line she reminds me of all the time: just because a door opens doesn't mean you have to go through it. I'm a creative, and I sometimes feel obligated to take an opportunity just because it's there. An available building, even a really cute one, isn't a reason on its own.
Nick shared what happened when he ignored his gut. A few years ago, he sat down with a potential client who had several businesses. The revenue would have been significant. The previous owner said go for it. The math said go for it. But Nick had a feeling the client was going to be a problem. He overrode it, and a couple of years later, it bit him.
Still, neither of us thinks gut feeling should be the only factor. Nick was clear that blindly trusting your gut is a great way to run headlong into a wall. The way I think about it, if you're scared because it's exciting, that's one kind of feeling. If you're scared because you're afraid it'll fail, that's when you look at the numbers.
Nick added something to the door idea that I liked. A lot of people freeze because they feel like they're standing in a room full of doors. But every door leads to another room full of doors, and walking through one doesn't mean you can't walk back out.
Know Your Heading
Nick pulled it together with an orienteering example: crossing a stretch of land to reach a specific point. Along the way you run into creeks, hills, forests, and gorges that block your view.
You can go around any of them, as long as you know your heading.
If you don't know where you're going, you'll end up somewhere. Just maybe not where you meant to.
Growth works the same way. Why do you want to grow? What would growth look like for you? Once you know that, you can work around obstacles without wandering. Take risks if you want to, but make them calculated, and run the numbers first.
Or, as Nick likes to say: plan your work, work your plan.
Stump Josh: Should I Stop Marketing If I'm Turning Work Away?
In Stump Josh, Nick asked me: if I'm already turning work away, should I stop marketing?
Probably not.
The marketing you're doing today isn't what filled your calendar. You're seeing the results of the work you've been doing all along. Stopping now won't slow down what's already in motion, and if business eventually slows, you'll have to restart the whole process.
I compare marketing to pushing a car. It takes a hard push to get it rolling. Once it's moving, it'll roll a little on its own, but eventually it slows down and you have to push hard again. A steady push the whole time is a lot easier than stopping and starting.
If marketing has become a financial strain while people are lining up for your services, that points back to pricing.
How to Raise Prices Without Blindsiding Customers
Nick followed up with another one: when I do raise my prices, how do I tell customers without them feeling blindsided?
Don't do it out of the blue, and make sure your existing customers are the first to know. If they find out from your website or a social media post, you've damaged their trust, and that's hard to win back.
That's true even if you aren't raising prices on existing customers. Call, text, or email to let them know either that their price is changing on a specific date, or that prices are going up for new clients but theirs is staying the same.
Ideally, give them 14 to 30 days' notice. A price change shouldn't come as a shock.
Growth Is a Trade
Nick wrapped it up this way: growth isn't automatically good or bad. It's a trade.
For Betty, it was $400,000 in sales for $35,000 more in her pocket, and probably a lot of her Saturdays. Some owners would take that deal. Some wouldn't.
The only wrong move is making the trade without knowing what it actually costs.
Nick left listeners with a sentence to finish this week:
"If my business grew, I'd want it to get me ______."
Write it down. If you can't fill in the blank yet, that's your answer for now.
Watch the Conversation
In this episode of the Planting Seeds Podcast, Nick and I talk about whether you should grow your business, the numbers to check before expanding, why raising prices might come before adding a crew, the warning signs of growing too fast, when to trust your gut, why you shouldn't stop marketing when you're busy, and how to tell customers about a price increase.
At Harvest Advisory Group, we help business owners look at the real numbers behind a growth decision before they commit to it.
Because bigger only matters if it gets you somewhere you actually want to go.
